Afcons Infrastructure IPO opens on October 25: Check business model, price band & more

Afcons Infrastructure Limited IPO is scheduled to open for subscription on Friday, October 25. The infrastructure engineering firm aims to raise ₹5,430 crore through its initial public offering.

Afcons Infrastructure IPO: Price band, lot size

Afcons Infrastructure IPO, worth ₹5,430 crore, comprises a fresh issuance of 2.69 crore shares, aggregating to ₹1,250 crore, along with an offer-for-sale (OFS) portion of 9.03 crore shares, amounting to ₹4,180 crore.

The IPO price band has been fixed at ₹440 to ₹463 per share. Retail investors can place bids for a minimum single lot size of 32 shares, which aggregates to an investment of ₹14,816 per lot at the upper end of the price band.

Small Non-Institutional Investors (sNII) can apply for 14 lots, or 448 shares, amounting to an investment of ₹2,07,424. The lot size for Big Non-Institutional Investors (bNIIs) is 68 lots, or 2,176 shares, which translates to an investment of ₹10,07,488.

As much as 50% of the net issue size has been reserved for the Qualified Institutional Buyers (QIBS) and 35% for retail individual investors. As much as 15% of the net issue has been reserved for the Non-Institutional Investors (NIIs) category.

Afcons Infrastructure IPO dates

The IPO will open for bidding on October 25. The subscription will close on Tuesday, October 29. The IPO share allotment status will be finalised on Wednesday, October 30.

Refunds will be initiated for unsuccessful bidders on Thursday, October 31, and successful bidders will receive shares of the company in their Demat accounts the same day.

Shares of the company will be listed on the NSE and BSE. The tentative IPO listing date has been finalised as November 4.

Afcons Infrastructure: Financials and key competitors

The company posted a revenue of ₹3,213.47 crore for the quarter ended June 30, 2024 (Q1FY25) and the company’s Profit-After-Tax (PAT) stood at ₹91.59 crore. Its net worth at the end of the June quarter stood at ₹3,662.25 crore.

The company's revenue grew over 6% to ₹13,646 crore in FY24 against ₹12,844 crore in the preceding fiscal. The company’s PAT increased more than 9% to ₹449.76 crore in FY24 compared to ₹410.86 crore in FY23.

Indian infrastructure industry is expected to grow at a CAGR of 9.9% between FY23 and FY28 to reach ₹14,380.3 billion, which could bring new order win opportunities for the company

Afcons Infrastructure Limited is an engineering and construction company. The company’s key competitors include other major players such as Larsen & Toubro Limited, KEC International Limited, Kalpataru Projects International Limited and Dilip Buildcon Limited (DBL), according to the Red Herring Prospectus (RHP).

Afcons Infrastructure: Business model

Afcons Infrastructure is the flagship infrastructure, engineering and construction company of the Shapoorji Pallonji Group. The company has a strong track record of executing numerous Engineering, Procurement and Construction (EPC) projects within India and abroad.

According to its RHP, the projects undertaken by the company can broadly be divided into five categories: marine and industrial, surface transport, urban infrastructure, hydro and underground, and oil and gas.

In the last eleven fiscal years, up to 30 June 2024, it has completed 79 projects across 17 countries and 65 ongoing projects across 12 countries, aggregating an order book of ₹31,747 crore. Domestic orders comprise 75.6% of the total order book, while the rest are from international markets.

Some of its projects include the Chenab bridge in Jammu and Kashmir, the Atal tunnel in Rohtang, Himachal Pradesh, the MG Setu Bridge in Patna, Bihar, the Zambia—Lusaka City decongestion project, and the Male to Thilafushi link project in the Maldives.

Afcons Infrastructure IPO: Key strengths

• Afcons Infrastructure claims to have a strong track record of timely execution of large-scale projects. The company said in its RHP that it has a strong track record in efficient project management and execution, and a substantial majority of its projects are being executed ahead of or on schedule.

• The company has diversified order book across different business verticals, geographies, and clients.

• It has strong collaboration among internal teams and JV counterparties and a strategic equipment base, which leads to strong execution capabilities.

• The company is a part of the Shapoorji Pallonji conglomerate, which has a robust presence in the construction sector spanning over 150 years. Afcons Infra leverages the conglomerate’s construction industry expertise and reputation to drive business development.

• Afcons Infrastructure has a systematic risk management system in the form of a team comprising experienced senior management personnel. They are engaged in analysing and evaluating all proposed new bids and investments.

Afcons Infrastructure IPO: Risks and threat

• The company said in its RHP that it wins contracts through a competitive bidding process. Failure to qualify or win new contracts could adversely affect its business.

• The business is significantly depends on projects awarded by government or government-owned entities, which subjects the company to the risk of dependence on such firms.

• International operations expose it to complex management, legal, tax, operational, and economic risks, as well as exchange rate fluctuations.

• Afcons Infrastructure also said that its business is capital intensive and if it experiences insufficient cash flows or is unable to access suitable financing to meet working capital requirements the business could be negatively impacted.

• The construction company mentioned in its RHP that it requires statutory and regulatory permits and approvals in the ordinary course of its business, and failure to obtain, renew or maintain them in a timely manner can adversely affect its operations.